§ 29A.07 Lease Provisions Relating to Brokers

• Jurisdiction: United States
• Publication year: 2022

§ 29A.07 Lease Provisions Relating to Brokers

Many states now require brokers to provide agency disclosure forms to the parties to the transaction for their signature. The purpose of such a requirement is to focus the parties' attention on the fact that the broker is representing only one of them. It serves as a warning to the nonrepresented party that the broker is in fact only representing the other party. The various statutes dictate degrees of disclosure required. In general, the disclosure must state whether the broker represents the seller (the landlord) or the buyer (the tenant). If the broker is acting on behalf of both parties, additional facts or commitments on the part of the broker are mandated.

Such disclosure requirements, however, do not address all of the issues that might arise between the parties to a lease in connection with the broker's services. They also do not necessarily constitute a sufficient or clear legal basis for the assertion of any rights or obligations as between the parties to the lease, even though they might form a basis for a claim by or against the broker. It is advisable, therefore, for the parties to a lease to address the brokerage situation in a separate provision of the lease. Such clauses or sections can include some of the disclosure form facts, such as which party the broker represents. The represented party, however, is not always the one responsible for paying the broker's commission.

If not otherwise prohibited under applicable law, a landlord could require that the commission be paid by the tenant, or may require that the parties share the responsibility for its payment. In exchange for concessions by the tenant, or by custom in some locations, the landlord might assume the obligation to pay the tenant's broker. If the broker was engaged by the tenant in the first instance and the landlord did not agree to take on any obligations in connection with the brokerage, the fact of the tenant's sole liability and obligation vis-a-vis the broker should be set forth. Usually such a provision contains the representation by the parties that they have not engaged the services of any broker except the one or the ones referenced in the provision. Additionally, such a provision usually contains an indemnification of the other party...